DeGette, Others Launch Investigation Into Sellers of ‘Junk’ Health Insurance Plans

WASHINGTON, March 13 -- Rep. Diana DeGette, D-Colorado, issued the following news release:

* * *

- The Colorado Democrat and chair of the Energy and Commerce oversight committee requested documents from 12 companies about possibly misleading consumers

* * *

They're called "junk" health care plans because they don't comply with the Affordable Care Act. They don't provide coverage for prescription drugs or maternity care or people with pre-existing conditions. And while they may be cheaper than more traditional health insurance plans, the coverage they actually provide to consumers is little to none - hence them being called "junk."

These plans were first made available to consumers in 2018, after the Trump administration issued a new rule that allows them to be sold. But, now, U.S. Rep. Diana DeGette (D-CO) and others are leading a charge to protect consumers who may be misled about the coverage these plans actually provide.

As Chair of the House Energy and Commerce Committee's Oversight and Investigations panel, which oversees the nation's health care industry, DeGette, along with two other committee leaders, sent letters today to the heads of 12 companies that either sell or assist consumers in signing up for one of these junk plans, which are officially known as "short-term, limited-duration insurance" or STLDI plans.

"The Committee on Energy and Commerce is conducting oversight of STLDI and companies that sell STLDI plans," the lawmakers wrote. "The Committee's initial examination of these plans has yielded disturbing information about how insurance companies that sell STLDI discriminate against individuals with pre-existing conditions and put consumers at significant financial risk."

"Additionally," the committee members continued, "we are troubled that consumers who sign up for these plans are being misled about the nature of the coverage they are purchasing. Consumers are being denied coverage even for medical care that is rightfully covered under the terms of their contract, through a process known as post claims underwriting. As such, we request further information about the plans your company is offering and about these industry practices."

In their letters to the companies, the lawmakers cite concerns over several troubling reports of junk plans denying coverage, charging people more based on their age, gender or current health status, and refusing to cover pre-existing conditions.

In one example, an insurer refused to pay for a consumer's cancer treatment leaving him with $800,000 in medical bills. In refusing coverage, the insurer deemed that the beneficiary's cancer diagnosis was a pre-existing condition, even though the consumer wasn't diagnosed until after he had enrolled in the insurer's junk plan.

DeGette said she is particularly concerned with accounts of consumers being misled by insurance brokers and agents who are signing people up for these junk plans.

According to a study from the Georgetown University Health Policy Institute, insurers and brokers selling junk plans often engage in deceptive marketing tactics that can mislead consumers about the nature of the insurance policy they are purchasing, and often fail to provide consumers with detailed information on the medical services and benefits that are not included in the plan's coverage.

DeGette said such actions by insurers and brokers is inexcusable; and reports of consumers being misled about these junk plans is what led her committee to launch an investigation.

As part of that inquiry, DeGette and others have requested several documents and responses to a series of questions from the companies, including:

- All documents provided to applicants seeking to purchase your company's STLDI plans, including plan applications, all underwriting documents, and health questionnaires that applicants must answer about their health status and medical history.

- What percentage of applicants are denied coverage for these policies?

- An explanation of how your company markets STLDI plans to consumers, and copies of marketing materials and plan documents for STLDI plans offered in each state in which you sell these plans.

- Information on how much commission STLDI insurers pay to agents and brokers for STLDI plans.

- A written explanation of whether and how your company conducts post-claims underwriting on STLDI plans, including what constitutes a pre-existing condition under your company's policy.

- Have you received complaints from consumers or from insurance regulators in any state about deceptive advertising?

In addition to DeGette, the letters were co-signed by Reps. Frank Pallone, Jr. (D-NJ) and Anna G. Eshoo (D-CA) and sent to the following companies:

Agile Health Insurance

Anthem Blue Cross Blue Shield

Arkansas Blue Cross Blue Shield

Blue Cross of Idaho Group

Cambia Health Solutions

eHealth

Everest

Health Insurance Innovations

Healthcare Solutions Team

Independence Holding Company

National General

UnitedHealth Group

A copy of the letters sent to the companies is available here (https://degette.house.gov/sites/degette.house.gov/files/Agile%20Health%20Letter.pdf).